0001023131 2008-01-01 2008-12-31 0001023131 2009-01-01 0001023131 2008-01-01 0001023131 2008-06-30 0001023131 2009-07-24 0001023131 2009-04-01 2009-06-30 0001023131 2008-04-01 2008-06-30 0001023131 2008-01-01 2008-06-30 0001023131 2009-06-30 0001023131 2008-12-31 0001023131 2009-01-01 2009-06-30 xbrli:shares iso4217:USD <div> <a name="_AUCfa0c897ec3c04654a4e38fde35f4f793">5.  Acquisitions and Divestitures</a>   In March 2009, Covance acquired 100% of the stock of Swiss Pharma Contract Ltd. (“Swiss Pharma”), and its 50-bed clinical research facility based in Basel, Switzerland, for cash payments aggregating $19.4 million ($18.6 million net of cash acquired). Additionally, Covance repaid the entire $5.4 million balance of mortgage debt assumed in the Swiss Pharma acquisition. Transaction related costs of $0.5 million were reported as selling, general & administrative expense in the period incurred. This acquisition expands Covance’s clinical pharmacology presence in Europe and provides access to special patient populations for Phase I/IIa clinical studies. Swiss Pharma’s assets and liabilities acquired were included in the consolidated balance sheet at March 31, 2009 based on their estimated fair value as determined in a preliminary purchase price allocation. Results of operations for Swiss Pharma are reported in Covance’s early development segment.   In addition to the initial cash consideration of $19.4 million, Covance accrued a liability of $3.4 million for the estimated fair value of future contingent consideration expected to be payable by Covance based upon Swiss Pharma reaching specific performance metrics over the next three years of operation. The potential contingent consideration in this transaction ranges from zero to $4.6 million and is payable in three annual installments based upon operational performance in 2009, 2010 and 2011. The table below summarizes the preliminary purchase price allocation for the Swiss Pharma acquisition:   <div align="center"> <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:-106.05pt;border-collapse:collapse;mso-table-layout-alt: fixed;mso-padding-alt:0in 5.4pt 0in 5.4pt"> <tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> <span style= "font-size:10.0pt;font-family:Times New Roman;mso-fareast-font-family: Times New Roman;background:white;mso-highlight:white;mso-ansi-language: EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA"> Estimated fair value of tangible assets and liabilities acquired: </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:1"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Cash........................................................................................................................................ </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> $     750 </td> </tr> <tr style="mso-yfti-irow:2"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Accounts receivable and unbilled, net............................................................................. </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> 1,987 </td> </tr> <tr style="mso-yfti-irow:3"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Property and equipment...................................................................................................... </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> 7,465 </td> </tr> <tr style="mso-yfti-irow:4"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Unearned revenue................................................................................................................ </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> (838) </td> </tr> <tr style="mso-yfti-irow:5"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Mortgage debt...................................................................................................................... </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> (5,436) </td> </tr> <tr style="mso-yfti-irow:6"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Other net liabilities............................................................................................................... </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> (1,116) </td> </tr> <tr style="mso-yfti-irow:7"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Fair value of intangible assets acquired (7 year weighted average useful life): </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:8"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Customer list (10 year useful life)....................................................................................... </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> 1,243 </td> </tr> <tr style="mso-yfti-irow:9"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Non-compete agreements (3 year useful life)................................................................... </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> 437 </td> </tr> <tr style="mso-yfti-irow:10"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Order backlog (1 year useful life)....................................................................................... </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt"> 162 </td> </tr> <tr style="mso-yfti-irow:11"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt"> Goodwill....................................................................................................................................... </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt">   18,177 </td> </tr> <tr style= "mso-yfti-irow:12;mso-yfti-lastrow:yes;height:.2in"> <td width="483" valign="top" style= "width:362.3pt;padding:0in 5.4pt 0in 5.4pt; height:.2in"> Net assets acquired.............................................................................................................. </td> <td width="80" valign="top" style= "width:60.0pt;padding:0in 5.4pt 0in 5.4pt; height:.2in"> $22,831 </td> </tr> </table> </div>   Intangible assets will be amortized on a straight-line basis over their estimated useful lives. The estimated amortization expense expected to be recorded in future periods is as follows:   <table class="MsoNormalTable" border="1" cellspacing="0" cellpadding="0" style= "margin-left:.7in;border-collapse:collapse;mso-table-layout-alt:fixed; border:none;mso-border-alt:solid windowtext .5pt;mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:.5pt solid windowtext;mso-border-insidev:.5pt solid windowtext"> <tr style= "mso-yfti-irow:0;mso-yfti-firstrow:yes;page-break-inside:avoid"> <td width="480" valign="top" style= "width:5.0in;border:none;padding:0in 5.4pt 0in 5.4pt"> 2009............................................................................................................................................... </td> <td width="84" valign="top" style= "width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt"> $     364 </td> </tr> <tr style="mso-yfti-irow:1;page-break-inside:avoid"> <td width="480" valign="top" style= "width:5.0in;border:none;padding:0in 5.4pt 0in 5.4pt"> 2010............................................................................................................................................... </td> <td width="84" valign="top" style= "width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt"> 270 </td> </tr> <tr style="mso-yfti-irow:2;page-break-inside:avoid"> <td width="480" valign="top" style= "width:5.0in;border:none;padding:0in 5.4pt 0in 5.4pt"> 2011............................................................................................................................................... </td> <td width="84" valign="top" style= "width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt"> 270 </td> </tr> <tr style="mso-yfti-irow:3;page-break-inside:avoid"> <td width="480" valign="top" style= "width:5.0in;border:none;padding:0in 5.4pt 0in 5.4pt"> 2012............................................................................................................................................... </td> <td width="84" valign="top" style= "width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt"> 161 </td> </tr> <tr style="mso-yfti-irow:4;page-break-inside:avoid"> <td width="480" valign="top" style= "width:5.0in;border:none;padding:0in 5.4pt 0in 5.4pt"> 2013............................................................................................................................................... </td> <td width="84" valign="top" style= "width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt"> 124 </td> </tr> <tr style="mso-yfti-irow:5;page-break-inside:avoid"> <td width="480" valign="top" style= "width:5.0in;border:none;padding:0in 5.4pt 0in 5.4pt"> 2014 and beyond........................................................................................................................ </td> <td width="84" valign="top" style= "width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt">       653 </td> </tr> <tr style= "mso-yfti-irow:6;mso-yfti-lastrow:yes;page-break-inside:avoid"> <td width="480" valign="top" style= "width:5.0in;border:none;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="84" valign="top" style= "width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt"> $  1,842 </td> </tr> </table>   The purchase price allocation is based upon preliminary estimates pending completion of a closing balance sheet, using available information and making assumptions management believes are reasonable. Accordingly, the purchase price allocation is subject to finalization. The goodwill of $18.2 million resulting from the acquisition arises largely from the synergies expected from combining the Swiss Pharma operations with our existing European clinical pharmacology operations, as well as from the benefits derived from the assembled Swiss Pharma workforce. None of the goodwill recognized is expected to be deductible for tax purposes.   In October 2008, Covance acquired certain assets from Eli Lilly and Company (“Lilly”) for cash payments totaling $51.6 million (including transaction related costs of $1.6 million). The acquired assets consisted of 450-acres of Lilly’s early drug development campus (land, buildings and equipment) located in Greenfield, Indiana (“Greenfield”). In addition, Covance and Lilly entered into a 10-year agreement with a minimum value of $1.6 billion pursuant to which Covance will provide Lilly a broad range of drug development services. The results of operations for Greenfield and the acquired assets, which are now part of Covance’s early development segment, are included in Covance’s consolidated financial statements beginning in October 2008.   In November 2007, Covance sold its centralized ECG business (“Cardiac Safety Services”), part of Covance’s late-stage development segment, to eResearchTechnology Inc. (“eRT”) for initial cash proceeds of $35.2 million and a pre-tax gain of $6.6 million ($4.1 million after tax). Simultaneously therewith, Covance entered into a ten year marketing agreement with eRT under which Covance will continue to offer its clients cardiac safety services. During the three months ended June 30, 2009 and 2008 and the six month period ended June 30, 2008, Covance received additional proceeds from this sale reflecting contingent consideration related to transferred backlog totaling $0.6 million, $0.9 million and $3.9 million, respectively, and recognized an additional pre-tax gain of $0.6 million, $0.9 million and $3.9 million, ($0.4 million, $0.6 million and $2.6 million after tax), respectively. Covance may receive up to approximately $7.4 million in additional future contingent consideration relating to transferred backlog and revenues generated by eRT from new contracts secured under the first three years of the marketing agreement. In addition, Covance expects to receive referral fees during the term of the long-term marketing agreement.   See Note 10. Subsequent Events. <style> /*<![CDATA[*/ st1:*{behavior:url(#ieooui) }  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div> <div> <a name="_AUC6228c0f108a7436596c596345ef8974e">4.  Equity Investments</a>   In December 2008, Covance acquired a minority equity position (less than 20%) in Caprion Proteomics (“Caprion”), a privately held company headquartered in Montreal, Canada for a total cost of $3.1 million. Caprion is a leading provider of proteomics-based services to the pharmaceutical industry. Under the terms of the agreement, Covance will serve as the exclusive contract research organization distributor of Caprion’s proteomic biomarker services and Caprion will serve as Covance’s exclusive proteomic discovery provider. As Covance owns less than a 20% interest in Caprion and does not exercise significant influence over the operating or financial decisions of Caprion, the investment is accounted for under the cost method of Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. This investment is included in other assets on the consolidated balance sheet.   Covance has a 47% minority equity position in Noveprim Limited (“Noveprim”), a supplier of research products, which was acquired in March 2004 at a total cost of $20.7 million.  The excess of the purchase price over the underlying equity in Noveprim’s net assets at the date of acquisition of $13.8 million represents goodwill and is included in the carrying value of Covance’s investment.  This investment is reflected in other assets on the consolidated balance sheet. During the three and six month periods ended June 30, 2009, Covance recognized losses of $0.2 million and $0.04 million, respectively, representing its share of Noveprim’s losses, including the elimination of profit on inventory purchased from Noveprim and still on hand at Covance at June 30, 2009. During the three and six month periods ended June 30, 2008, Covance recognized $0.7 million and $1.0 million, respectively, representing its share of Noveprim’s earnings, less the elimination of profit on inventory purchased from Noveprim and still on hand at Covance at June 30, 2008. The carrying value of Covance’s investment in Noveprim at June 30, 2009 and December 31, 2008 was $22.5 million and $23.4 million, respectively.   Covance has a minority equity position (less than 20%) in BioClinica, Inc. (“BIOC”) (Nasdaq GM:BIOC), formerly known as Bio Imaging Technologies, Inc.  BIOC uses proprietary medical imaging technologies to process and analyze medical images, and also provides other services, including the data-basing and regulatory submission of medical images, quantitative data and text.  During the three and six month periods ended June 30, 2008, Covance recognized income of $0.1 million and $0.3 million, respectively, representing its pro rata share of BIOC’s earnings. In the fourth quarter of 2008, Covance suspended the use of the equity method of accounting as its ownership interest in BIOC fell below 20% and it could no longer exercise significant influence over BIOC’s operations. In the fourth quarter of 2008, Covance began accounting for its investment in BIOC as an available-for-sale security in accordance with SFAS 115.  The carrying value of Covance’s investment in BIOC as of June 30, 2009 and December 31, 2008 was $8.4 million and $8.6 million, respectively, as determined based on quoted market prices in an active market. The $0.2 million decrease in the carrying value of the investment results in a $0.1 million reduction in the unrealized gain on investment, net of tax, which is included within accumulated other comprehensive income on the consolidated balance sheet. Accordingly, the balance in the unrealized gain on investment at June 30, 2009 and December 31, 2008 was $4.2 million and $4.4 million, net of tax, respectively.   <style> /*<![CDATA[*/ st1:*{behavior:url(#ieooui) }  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div>

<div> <a name="_AUC8cab08a203504b97ad4fa433ec0b122f">8.  Stock-Based Compensation Plans</a>   Covance sponsors several employee stock-based compensation plans which are described more fully in Note 10 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008.   In May 2007, Covance’s shareholders approved the 2007 Employee Equity Participation Plan (the “2007 EEPP”) in replacement of the 2002 Employee Equity Participation Plan (the “2002 EEPP”). Effective upon approval of the 2007 EEPP, no further grants or awards were permitted under the 2002 EEPP. Shares remaining for grant under the 2002 EEPP are available for grant under the 2007 EEPP. In addition, the Covance Board of Directors directed that, effective May 3, 2007, no further grants would be permitted under the 2002 Employee Stock Option Plan (the “2002 ESOP”) and, unlike the 2002 EEPP, shares remaining for grant under the 2002 ESOP are not available for grant under the 2007 EEPP. The 2007 EEPP became effective on May 3, 2007 and will expire on May 2, 2017.  The 2007 EEPP authorizes the Compensation and Organization Committee of the Board of Directors (the “Compensation Committee”), or such committee as is appointed by the Covance Board of Directors, to administer the 2007 EEPP, to grant awards to employees and consultants of Covance or entities in which Covance has a controlling or significant equity interest.  The 2007 EEPP authorizes the Compensation Committee to grant the following awards: options to purchase common stock; stock appreciation rights; and other stock awards either singly or in combination.  The exercise period for stock options granted under the 2007 EEPP is determined by the Compensation Committee at the time of grant, and is generally ten years from the date of grant. The vesting period for stock options and stock awards granted under the 2007 EEPP is determined by the Compensation Committee at the time of grant. Generally, options vest over a three year period for senior executives and over a two or three year period for all other optionees. Stock awards generally vest over a three year period for all employees. The number of shares of Covance common stock initially available for grant under the 2007 EEPP totaled approximately 1.6 million plus approximately 3.3 million shares remaining available under the 2002 EEPP at the time the 2007 EEPP was approved. All stock option grants under the 2002 EEPP remaining outstanding are now administered in accordance with the provisions of the 2002 EEPP out of shares issuable under the 2007 EEPP. The Company issues authorized but previously unissued shares when options are exercised or for stock awards. There have been no grants of stock appreciation rights or grants of options to purchase common stock or stock awards to consultants of Covance or employees or consultants of entities in which Covance has a controlling or significant equity interest under the 2002 ESOP, the 2002 EEPP or the 2007 EEPP. At June 30, 2009 there were approximately 2.8 million shares remaining available for option grants or stock awards under the 2007 EEPP, up to 0.9 million of which are available for issuance as stock awards.    The grant-date fair value of stock option awards is estimated using an option pricing model as more fully described in Note 10 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008. The grant-date fair value of options expected to vest is expensed on a straight-line basis over the vesting period of the related awards.   The following table sets forth the weighted-average assumptions used to calculate the fair value of options granted for the three and six month periods ended June 30, 2009 and 2008:   <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:5.4pt;border-collapse:collapse;mso-table-layout-alt:fixed; mso-padding-alt:0in 5.4pt 0in 5.4pt"> <tr style= "mso-yfti-irow:0;mso-yfti-firstrow:yes;page-break-inside:avoid; height:16.2pt"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 5.4pt 0in 5.4pt; height:16.2pt"> <h5 style="margin-top:0in">   </h5> </td> <td width="192" colspan="2" style= "width:2.0in;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.2pt"> <h1> Three Months Ended June 30 </h1> </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 5.4pt 0in 5.4pt; height:16.2pt"> <h1>   </h1> </td> <td width="198" colspan="2" style= "width:148.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.2pt"> <h1> Six Months Ended June 30 </h1> </td> </tr> <tr style= "mso-yfti-irow:1;page-break-inside:avoid;height:16.7pt"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt">   </td> <td width="96" style= "width:1.0in;border:none;border-bottom:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 2009 </td> <td width="96" style= "width:1.0in;border-top:solid windowtext 1.0pt;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:none;mso-border-top-alt: solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:16.7pt"> 2008 </td> <td width="18" style= "width:13.5pt;padding:0in 5.4pt 0in 5.4pt;height:16.7pt">   </td> <td width="96" style= "width:1.0in;border:none;border-bottom:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 2009 </td> <td width="102" style= "width:76.5pt;border-top:solid windowtext 1.0pt; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:16.7pt"> 2008 </td> </tr> <tr style= "mso-yfti-irow:2;page-break-inside:avoid;height:16.7pt"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> Expected stock price volatility.............................. </td> <td width="96" valign="top" style= "width:1.0in;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:16.7pt"> 36% </td> <td width="96" valign="top" style= "width:1.0in;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:16.7pt"> 39% </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt">   </td> <td width="96" valign="top" style= "width:1.0in;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:16.7pt"> 36% </td> <td width="102" valign="top" style= "width:76.5pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:16.7pt"> 39% </td> </tr> <tr style= "mso-yfti-irow:3;page-break-inside:avoid;height:16.7pt"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> Risk free interest rate(s)......................................... </td> <td width="96" valign="top" style= "width:1.0in;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 0.3% - 2.6% </td> <td width="96" valign="top" style= "width:1.0in;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 1.9% - 3.7% </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt">   </td> <td width="96" valign="top" style= "width:1.0in;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 0.3% - 2.6% </td> <td width="102" valign="top" style= "width:76.5pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 1.9% - 3.7% </td> </tr> <tr style= "mso-yfti-irow:4;mso-yfti-lastrow:yes;page-break-inside:avoid; height:16.7pt"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> Expected life of options (years)........................... </td> <td width="96" valign="top" style= "width:1.0in;padding:0in 5.4pt 0in 5.4pt; height:16.7pt">           4.6 </td> <td width="96" valign="top" style= "width:1.0in;padding:0in 5.4pt 0in 5.4pt; height:16.7pt">           4.4 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt">   </td> <td width="96" valign="top" style= "width:1.0in;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 4.6 </td> <td width="102" valign="top" style= "width:76.5pt;padding:0in 5.4pt 0in 5.4pt; height:16.7pt"> 4.4 </td> </tr> </table>   Restricted stock awards are granted subject to certain restrictions, including in some cases service conditions and in other cases service and performance conditions.  The grant-date fair value of restricted stock and performance-based awards, which has been determined based upon the market value of Covance’s shares on the grant date, is expensed on a straight-line basis over the vesting period of the related awards.   Covance also has an employee stock purchase plan (“ESPP”) pursuant to which Covance may make available for sale to its employees shares of its common stock at a price equal to 85% of the lower of the market value on the first or last day of each calendar quarter.  The ESPP is intended to give Covance employees the opportunity to purchase shares of Covance common stock through payroll deductions.    Results of operations for the three month period ended June 30, 2009 include total stock-based compensation expense of $7.4 million ($5.0 million net of tax benefit of $2.4 million), $3.1 million of which has been included in cost of revenue and $4.3 million of which has been included in selling, general and administrative expenses.  Results of operations for the six month period ended June 30, 2009 include total stock-based compensation expense of $13.2 million ($8.9 million net of tax benefit of $4.3 million), $5.4 million of which has been included in cost of revenue and $7.8 million of which has been included in selling, general and administrative expenses.  Results of operations for the three month period ended June 30, 2008 include total stock-based compensation expense of $6.5 million ($4.4 million net of tax benefit of $2.1 million), $2.5 million of which has been included in cost of revenue and $4.0 million of which has been included in selling, general and administrative expenses. Results of operations for the six month period ended June 30, 2008 include total stock-based compensation expense of $12.6 million ($8.5 million net of tax benefit of $4.1 million), $4.8 million of which has been included in cost of revenue and $7.8 million of which has been included in selling, general and administrative expenses. <style> /*<![CDATA[*/  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div>

<div> <a name="_AUCc6bcb5758a4a438ab8c5a459c51658ef">1.  Basis of Presentation</a>   The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three and six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.  The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.  You should read these unaudited consolidated financial statements together with the historical consolidated financial statements of Covance Inc. and subsidiaries (“Covance” or the “Company”) for the years ended December 31, 2008, 2007, and 2006 included in our Annual Report on Form 10-K for the year ended December 31, 2008. <style> /*<![CDATA[*/ st1:*{behavior:url(#ieooui) }  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div>

<div> <a name="_AUC3e2609014de44b69a520ec85bc7d57c2">7.  Defined Benefit Plans</a>   Covance sponsors various pension and other post-retirement benefit plans. As of December 31, 2008, Covance adopted the measurement date provisions of SFAS 158. Each of the benefit plans described below has a 2008 measurement date of December 31. Prior to 2008, the measurement dates for the various plans ranged from September 30 to December 31.   Defined Benefit Pension Plans   Covance sponsors two defined benefit pension plans for the benefit of its employees at two United Kingdom subsidiaries and one defined benefit pension plan for the benefit of its employees at a German subsidiary, all of which are legacy plans of previously acquired companies.  Benefit amounts for all three plans are based upon years of service and compensation.  The German plan is unfunded while the United Kingdom plans are funded.  Covance’s funding policy has been to contribute annually a fixed percentage of the eligible employee’s salary at least equal to the local statutory funding requirements.  Pension plan assets are administered by the plans’ trustees and are principally invested in equity and debt securities.  The components of net periodic pension expense for these plans for the three and six month periods ended June 30, 2009 and 2008 are as follows:   <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:.4pt;border-collapse:collapse;mso-table-layout-alt:fixed; mso-padding-alt:0in 0in 0in 0in"> <tr style= "mso-yfti-irow:0;mso-yfti-firstrow:yes;page-break-inside:avoid; height:.15in;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.15in;mso-height-rule:exactly">   </td> <td width="186" colspan="3" valign="top" style= "width:139.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.15in;mso-height-rule:exactly"> United Kingdom Plans </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.15in;mso-height-rule:exactly">   </td> <td width="174" colspan="3" valign="top" style= "width:130.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.15in;mso-height-rule:exactly"> German Plan </td> </tr> <tr style= "mso-yfti-irow:1;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="186" colspan="3" valign="top" style= "width:139.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Three Months Ended June 30 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="174" colspan="3" valign="top" style= "width:130.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-top-alt:solid windowtext .5pt; mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Three Months Ended June 30 </td> </tr> <tr style= "mso-yfti-irow:2;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .75pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2008 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="12" valign="top" style= "width:9.0pt;border:none;border-top:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;padding:0in 0in 0in 0in;height:.2in; mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;border-top:solid windowtext 1.0pt; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> 2008 </td> </tr> <tr style= "mso-yfti-irow:3;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> Components of Net Periodic Pension Cost: </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:4;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Service cost............................................................... </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            828 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $         1,379 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            137 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            146 </td> </tr> <tr style= "mso-yfti-irow:5;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Interest cost............................................................... </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">              1,892 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">              2,063 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 142 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 138 </td> </tr> <tr style= "mso-yfti-irow:6;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Expected return on plan assets............................... </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">             (1,986) </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">             (2,341) </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> </tr> <tr style= "mso-yfti-irow:7;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Amortization of net actuarial loss.......................... </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 306 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 318 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                     1 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   14 </td> </tr> <tr style= "mso-yfti-irow:8;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Participant contributions......................................... </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                (508) </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                (527) </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> </tr> <tr style= "mso-yfti-irow:9;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Net periodic pension cost....................................... </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            532 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            892 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            280 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            298 </td> </tr> <tr style= "mso-yfti-irow:10;page-break-inside:avoid;height:.1in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:11;page-break-inside:avoid;height:14.0pt"> <td width="360" colspan="2" valign="top" style= "width:3.75in;padding:0in 0in 0in 0in; height:14.0pt"> Assumptions Used to Determine Net Periodic Pension Cost: </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:14.0pt">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:14.0pt">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:14.0pt">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:14.0pt">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:14.0pt">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:14.0pt">   </td> </tr> <tr style= "mso-yfti-irow:12;page-break-inside:avoid;height:12.25pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly">   Discount rate............................................................. </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly"> 6.25% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly"> 5.50% </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly"> 6.25% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly"> 5.60% </td> </tr> <tr style= "mso-yfti-irow:13;page-break-inside:avoid;height:13.7pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   Expected rate of return on assets........................... </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> 6.75% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> 6.75% </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> n/a </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> n/a </td> </tr> <tr style= "mso-yfti-irow:14;mso-yfti-lastrow:yes;page-break-inside:avoid; height:13.7pt;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   Salary increases........................................................ </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> 4.25% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> 4.25% </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> 3.00% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:13.7pt;mso-height-rule:exactly"> 3.00% </td> </tr> </table>   <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:.4pt;border-collapse:collapse;mso-table-layout-alt:fixed; mso-padding-alt:0in 0in 0in 0in"> <tr style= "mso-yfti-irow:0;mso-yfti-firstrow:yes;page-break-inside:avoid; height:.15in;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.15in;mso-height-rule:exactly">   </td> <td width="185" colspan="4" valign="top" style= "width:138.7pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.15in;mso-height-rule:exactly"> United Kingdom Plans </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.15in;mso-height-rule:exactly">   </td> <td width="175" colspan="6" valign="top" style= "width:131.25pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.15in;mso-height-rule:exactly"> German Plan </td> </tr> <tr style= "mso-yfti-irow:1;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="185" colspan="4" valign="top" style= "width:138.7pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Six Months Ended June 30 </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="175" colspan="6" valign="top" style= "width:131.25pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Six Months Ended June 30 </td> </tr> <tr style= "mso-yfti-irow:2;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.15pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .75pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> 2008 </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;border:none;border-bottom: solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> 2008 </td> </tr> <tr style= "mso-yfti-irow:3;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> Components of Net Periodic Pension Cost: </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:4;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Service cost............................................................... </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $         1,561 </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $         2,762 </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            270 </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            292 </td> </tr> <tr style= "mso-yfti-irow:5;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Interest cost............................................................... </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">              3,568 </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">              4,138 </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 279 </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 277 </td> </tr> <tr style= "mso-yfti-irow:6;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Expected return on plan assets............................... </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">             (3,745) </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">             (4,694) </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> </tr> <tr style= "mso-yfti-irow:7;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Amortization of net actuarial loss.......................... </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 577 </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 637 </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                     3 </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   25 </td> </tr> <tr style= "mso-yfti-irow:8;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Participant contributions......................................... </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                (958) </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">             (1,058) </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> </tr> <tr style= "mso-yfti-irow:9;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Net periodic pension cost....................................... </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $         1,003 </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $         1,785 </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            552 </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            594 </td> </tr> <tr style= "mso-yfti-irow:10;page-break-inside:avoid;height:.1in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="17" valign="top" style= "width:13.1pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.45pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="24" colspan="2" valign="top" style= "width:18.35pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.65pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="12" colspan="2" valign="top" style= "width:9.1pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> <td width="85" colspan="2" valign="top" style= "width:63.5pt;padding:0in 0in 0in 0in; height:.1in;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:11;page-break-inside:avoid;height:.2in"> <td width="353" colspan="2" valign="top" style= "width:264.85pt;padding:0in 0in 0in 0in; height:.2in"> Assumptions Used to Determine Net Periodic Pension Cost: </td> <td width="18" colspan="2" valign="top" style= "width:13.85pt;padding:0in 0in 0in 0in; height:.2in">   </td> <td width="90" colspan="2" valign="top" style= "width:67.6pt;padding:0in 0in 0in 0in; height:.2in">   </td> <td width="24" colspan="2" valign="top" style= "width:18.1pt;padding:0in 0in 0in 0in; height:.2in">   </td> <td width="78" colspan="2" valign="top" style= "width:58.6pt;padding:0in 0in 0in 0in; height:.2in">   </td> <td width="12" colspan="2" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in">   </td> </tr> <tr style= "mso-yfti-irow:12;page-break-inside:avoid;height:13.05pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly">   Discount rate............................................................. </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly"> 6.25% </td> <td width="18" colspan="2" valign="top" style= "width:13.85pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.6pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly"> 5.50% </td> <td width="24" colspan="2" valign="top" style= "width:18.1pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.6pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly"> 6.25% </td> <td width="12" colspan="2" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:13.05pt;mso-height-rule:exactly"> 5.60% </td> </tr> <tr style= "mso-yfti-irow:13;page-break-inside:avoid;height:14.85pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly">   Expected rate of return on assets........................... </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly"> 6.75% </td> <td width="18" colspan="2" valign="top" style= "width:13.85pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.6pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly"> 6.75% </td> <td width="24" colspan="2" valign="top" style= "width:18.1pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.6pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly"> n/a </td> <td width="12" colspan="2" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:14.85pt;mso-height-rule:exactly"> n/a </td> </tr> <tr style= "mso-yfti-irow:14;mso-yfti-lastrow:yes;page-break-inside:avoid; height:18.9pt;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:206.7pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly">   Salary increases........................................................ </td> <td width="78" valign="top" style= "width:58.15pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly"> 4.25% </td> <td width="18" colspan="2" valign="top" style= "width:13.85pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly">   </td> <td width="90" colspan="2" valign="top" style= "width:67.6pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly"> 4.25% </td> <td width="24" colspan="2" valign="top" style= "width:18.1pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly">   </td> <td width="78" colspan="2" valign="top" style= "width:58.6pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly"> 3.00% </td> <td width="12" colspan="2" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:18.9pt;mso-height-rule:exactly"> 3.00% </td> </tr><![if !supportMisalignedColumns]> <tr height="0"> <td width="276" style="border:none"></td> <td width="78" style="border:none"></td> <td width="17" style="border:none"></td> <td width="1" style="border:none"></td> <td width="89" style="border:none"></td> <td width="1" style="border:none"></td> <td width="23" style="border:none"></td> <td width="1" style="border:none"></td> <td width="77" style="border:none"></td> <td width="1" style="border:none"></td> <td width="11" style="border:none"></td> <td width="1" style="border:none"></td> <td width="84" style="border:none"></td> </tr><![endif]> </table> <h2 style= "text-indent:.25in;mso-hyphenate:auto;tab-stops:.5in">   </h2> <h2 style= "text-indent:.25in;mso-hyphenate:auto;tab-stops:.5in"> Supplemental Executive Retirement Plan </h2>   In addition to these foreign defined benefit pension plans, Covance also has a non-qualified Supplemental Executive Retirement Plan (“SERP”).  The SERP, which is not funded, is intended to provide retirement benefits for certain executive officers of Covance.  Benefit amounts are based upon years of service and compensation of the participating employees.  The components of net periodic pension cost for the three and six month periods ended June 30, 2009 and 2008 are as follows:   <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:.4pt;border-collapse:collapse;mso-table-layout-alt:fixed; mso-padding-alt:0in 0in 0in 0in"> <tr style= "mso-yfti-irow:0;mso-yfti-firstrow:yes;page-break-inside:avoid; height:.2in;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="186" colspan="3" valign="top" style= "width:139.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Three Months Ended June 30 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="174" colspan="3" valign="top" style= "width:130.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Six Months Ended June 30 </td> </tr> <tr style= "mso-yfti-irow:1;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .75pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2008 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2008 </td> </tr> <tr style= "mso-yfti-irow:2;page-break-inside:avoid;height:17.85pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:17.85pt;mso-height-rule:exactly"> Components of Net Periodic Pension Cost: </td> <td width="78" valign="top" style= "width:58.5pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:17.85pt;mso-height-rule: exactly">   </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:17.85pt;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:17.85pt;mso-height-rule: exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:17.85pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:17.85pt;mso-height-rule: exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:17.85pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:17.85pt;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:3;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Service cost............................................................... </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            425 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            308 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            849 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            617 </td> </tr> <tr style= "mso-yfti-irow:4;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Interest cost............................................................... </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 149 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 217 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 298 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 434 </td> </tr> <tr style= "mso-yfti-irow:5;page-break-inside:avoid;height:13.5pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">   Amortization of prior service cost (credit)............ </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">                  (30) </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">                  (30) </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">                  (59) </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:13.5pt;mso-height-rule:exactly">                  (59) </td> </tr> <tr style= "mso-yfti-irow:6;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Amortization of net actuarial loss.......................... </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   27 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   — </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   53 </td> </tr> <tr style= "mso-yfti-irow:7;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Net periodic pension cost....................................... </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            544 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            522 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $         1,088 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $         1,045 </td> </tr> <tr style= "mso-yfti-irow:8;page-break-inside:avoid;height:8.55pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:9;page-break-inside:avoid;height:.25in;mso-height-rule: exactly"> <td width="354" colspan="2" style= "width:265.5pt;padding:0in 0in 0in 0in; height:.25in;mso-height-rule:exactly"> Assumptions Used to Determine Net Periodic Pension Cost: </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.25in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.25in;mso-height-rule:exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.25in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.25in;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.25in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.25in;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:10;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Discount rate............................................................. </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 6.00% </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 5.50% </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 6.00% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 5.50% </td> </tr> <tr style= "mso-yfti-irow:11;mso-yfti-lastrow:yes;page-break-inside:avoid; height:.2in;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:207.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Salary increases........................................................ </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 4.00% </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="90" valign="top" style= "width:67.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 4.00% </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 4.00% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 4.00% </td> </tr> </table>   <h2 style= "text-indent:.25in;mso-hyphenate:auto;tab-stops:.5in"> Post-Employment Retiree Health and Welfare Plan </h2>   Covance also sponsors a post-employment retiree health and welfare plan for the benefit of eligible employees at certain U.S. subsidiaries who retire after satisfying service and age requirements.  This plan is funded on a pay-as-you-go basis and the cost of providing these benefits is shared with the retirees.  The components of net periodic post-retirement benefits cost for the three and six month periods ended June 30, 2009 and 2008 are as follows:   <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:.4pt;border-collapse:collapse;mso-table-layout-alt:fixed; mso-padding-alt:0in 0in 0in 0in"> <tr style= "mso-yfti-irow:0;mso-yfti-firstrow:yes;page-break-inside:avoid; height:.2in;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> <span style= "font-size:12.0pt;mso-bidi-font-size:10.0pt;font-family:Footlight MT Light; mso-fareast-font-family:Times New Roman;mso-bidi-font-family:Times New Roman; background:white;mso-highlight:white;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA">   </td> <td width="186" colspan="3" valign="top" style= "width:139.85pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Three Months Ended June 30 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="174" colspan="3" valign="top" style= "width:130.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .75pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Six Months Ended June 30 </td> </tr> <tr style= "mso-yfti-irow:1;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.35pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .75pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2008 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2009 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 2008 </td> </tr> <tr style= "mso-yfti-irow:2;page-break-inside:avoid;height:16.95pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:16.95pt;mso-height-rule:exactly"> Components of Net Periodic Post-retirement Benefits Cost: </td> <td width="78" valign="top" style= "width:58.35pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:16.95pt;mso-height-rule: exactly">   </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:16.95pt;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:16.95pt;mso-height-rule: exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:16.95pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:16.95pt;mso-height-rule: exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:16.95pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:16.95pt;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:3;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Service cost............................................................... </td> <td width="78" valign="top" style= "width:58.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $              28 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $              39 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $              56 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $              77 </td> </tr> <tr style= "mso-yfti-irow:4;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Interest cost............................................................... </td> <td width="78" valign="top" style= "width:58.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   82 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                   81 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 164 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">                 162 </td> </tr> <tr style= "mso-yfti-irow:5;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Net periodic post-retirement benefits cost........... </td> <td width="78" valign="top" style= "width:58.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            110 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            120 </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            220 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   $            239 </td> </tr> <tr style= "mso-yfti-irow:6;page-break-inside:avoid;height:8.55pt;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.35pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:8.55pt;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:7;page-break-inside:avoid;height:.3in;mso-height-rule: exactly"> <td width="462" colspan="4" style= "width:346.5pt;padding:0in 0in 0in 0in; height:.3in;mso-height-rule:exactly"> Assumptions Used to Determine Net Periodic Post- retirement Benefit Cost: </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.3in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.3in;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.3in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.3in;mso-height-rule:exactly">   </td> </tr> <tr style= "mso-yfti-irow:8;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Discount rate............................................................. </td> <td width="78" valign="top" style= "width:58.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 6.00% </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 5.50% </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 6.00% </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 5.50% </td> </tr> <tr style= "mso-yfti-irow:9;page-break-inside:avoid;height:.2in;mso-height-rule: exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   Health care cost trend rate...................................... </td> <td width="78" valign="top" style= "width:58.35pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 8.00%(a) </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 9.00%(a) </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 8.00%(a) </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly"> 9.00%(a) </td> </tr> <tr style= "mso-yfti-irow:10;mso-yfti-lastrow:yes;page-break-inside:avoid; height:37.8pt;mso-height-rule:exactly"> <td width="276" valign="top" style= "width:206.65pt;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly"> <![if !vml]>><![endif]> (a) decreasing to ultimate trend of 5.00% in 2014 </td> <td width="78" valign="top" style= "width:58.35pt;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly">   </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly">   </td> <td width="91" valign="top" style= "width:68.0pt;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly">   </td> <td width="24" valign="top" style= "width:.25in;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly">   </td> <td width="78" valign="top" style= "width:58.5pt;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly">   </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly">   </td> <td width="84" valign="top" style= "width:63.0pt;padding:0in 0in 0in 0in; height:37.8pt;mso-height-rule:exactly">   </td> </tr> </table> <style> /*<![CDATA[*/ v:* {behavior:url(#default#VML);} o:* {behavior:url(#default#VML);} w:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} st1:*{behavior:url(#ieooui) }  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; 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<div> <a name="_AUC8a3eb7428672496a9d8c1e41a2492954">10.  Subsequent Events</a>   On July 15, 2009, Covance entered into an agreement to sell its Interactive Voice & Web Response (“IVR”) service offering, part of Covance’s late-stage development segment, to Phase Forward for cash. In addition, Covance and Phase Forward have agreed to enter into a multi-year marketing agreement to provide Phase Forward’s electronic data capture solutions and IVR services to Covance’s clients for the next five years. Covance expects the sale, which is subject to certain closing conditions, to be completed during the third quarter of 2009.   On July 29, 2009, Covance announced it entered into an agreement with Merck & Co., Inc. (“Merck”) to acquire for cash, the assets and capabilities of Merck’s Gene Expression Laboratory (“GEL”) located in Seattle, Washington.  GEL performs genomics services such as genotyping, gene sequencing and gene expression profiling.  In addition, Covance and Merck have agreed to enter into an agreement pursuant to which Merck will exclusively purchase at least $145 million of genomic analysis services from Covance over a 5-year period. This agreement will expand Covance’s footprint in the genomics testing market. Covance expects to complete this transaction and assume responsibility for the operations in the third quarter of 2009, at which time the cash consideration will be paid.   Covance completed an evaluation of the impact of any other subsequent events through August 4, 2009, the date these financial statements were issued, and determined there were no other subsequent events requiring disclosure in or adjustment to these financial statements. <style> /*<![CDATA[*/ st1:*{behavior:url(#ieooui) }  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div>

<div> <a name="_AUC080a0e00611f4e108aef798eb5372687">3.  Treasury Stock</a>   In February 2007, the Covance Board of Directors authorized the repurchase of an additional 3.0 million shares under Covance’s stock repurchase program.  At June 30, 2009, there are approximately 0.8 million shares remaining for purchase under the 2007 authorization.  Covance also reacquires shares of its common stock in connection with certain employee benefit plans primarily when employees tender shares to satisfy income tax withholdings associated with the vesting of stock awards.  The following table sets forth the treasury stock activity during the six month periods ended June 30, 2009 and 2008.   <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:.4pt;border-collapse:collapse;mso-table-layout-alt:fixed; mso-padding-alt:0in 0in 0in 0in"> <tr style= "mso-yfti-irow:0;mso-yfti-firstrow:yes;page-break-inside:avoid; height:.2in;mso-height-rule:exactly"> <td width="366" valign="top" style= "width:274.5pt;padding:0in 0in 0in 0in; height:.2in;mso-height-rule:exactly">   </td> <td width="300" colspan="7" valign="top" style= "width:225.0pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:.2in;mso-height-rule:exactly"> Six Months Ended June 30 </td> </tr> <tr style= "mso-yfti-irow:1;page-break-inside:avoid;height:14.45pt;mso-height-rule: exactly"> <td width="366" valign="top" style= "width:274.5pt;padding:0in 0in 0in 0in; height:14.45pt;mso-height-rule:exactly">   </td> <td width="150" colspan="3" valign="top" style= "width:112.5pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:14.45pt;mso-height-rule:exactly">                   2009 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:14.45pt;mso-height-rule:exactly">   </td> <td width="132" colspan="3" valign="top" style= "width:99.0pt;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:14.45pt;mso-height-rule:exactly"> 2008 </td> </tr> <tr style= "mso-yfti-irow:2;page-break-inside:avoid;height:12.25pt;mso-height-rule: exactly"> <td width="366" valign="top" style= "width:274.5pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly"> (amounts in thousands) </td> <td width="66" valign="top" style= "width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly"> $ </td> <td width="18" valign="top" style= "width:13.5pt;border:none;border-top:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;padding:0in 0in 0in 0in;height:12.25pt; mso-height-rule:exactly">   </td> <td width="66" valign="top" style= "width:49.5pt;border-top:solid windowtext 1.0pt; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:12.25pt;mso-height-rule:exactly"> # shares </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly">   </td> <td width="60" valign="top" style= "width:45.0pt;border:none;border-bottom:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;padding:0in 0in 0in 0in; height:12.25pt;mso-height-rule:exactly"> $   </td> <td width="12" valign="top" style= "width:9.0pt;border:none;border-top:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;padding:0in 0in 0in 0in;height:12.25pt; mso-height-rule:exactly">   </td> <td width="60" valign="top" style= "width:45.0pt;border-top:solid windowtext 1.0pt; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 0in 0in 0in;height:12.25pt;mso-height-rule:exactly"> # shares </td> </tr> <tr style= "mso-yfti-irow:3;page-break-inside:avoid;height:26.95pt"> <td width="366" valign="top" style= "width:274.5pt;padding:0in 0in 0in 0in; height:26.95pt"> Shares repurchased in connection with:      Board approved buyback programs……..................................... </td> <td width="66" valign="top" style= "width:49.5pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:26.95pt">   $        ¾ </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:26.95pt">   </td> <td width="66" valign="top" style= "width:49.5pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:26.95pt">   ¾ </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:26.95pt">   </td> <td width="60" valign="top" style= "width:45.0pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:26.95pt">   $ 126,709 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:26.95pt">   </td> <td width="60" valign="top" style= "width:45.0pt;border:none;mso-border-top-alt: solid windowtext .5pt;padding:0in 0in 0in 0in;height:26.95pt">   1,500.0 </td> </tr> <tr style= "mso-yfti-irow:4;page-break-inside:avoid;height:12.0pt"> <td width="366" valign="top" style= "width:274.5pt;padding:0in 0in 0in 0in; height:12.0pt">      Employee benefit plans....................................... ………………… </td> <td width="66" valign="top" style= "width:49.5pt;padding:0in 0in 0in 0in; height:12.0pt">      2,316 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:12.0pt">   </td> <td width="66" valign="top" style= "width:49.5pt;padding:0in 0in 0in 0in; height:12.0pt">       58.4 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:12.0pt">   </td> <td width="60" valign="top" style= "width:45.0pt;padding:0in 0in 0in 0in; height:12.0pt">      3,718 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:12.0pt">   </td> <td width="60" valign="top" style= "width:45.0pt;padding:0in 0in 0in 0in; height:12.0pt">        44.8 </td> </tr> <tr style= "mso-yfti-irow:5;mso-yfti-lastrow:yes;page-break-inside:avoid; height:12.0pt"> <td width="366" valign="top" style= "width:274.5pt;padding:0in 0in 0in 0in; height:12.0pt">           Total………………………………….......................................... </td> <td width="66" valign="top" style= "width:49.5pt;padding:0in 0in 0in 0in; height:12.0pt"> $    2,316 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:12.0pt">   </td> <td width="66" valign="top" style= "width:49.5pt;padding:0in 0in 0in 0in; height:12.0pt">       58.4 </td> <td width="18" valign="top" style= "width:13.5pt;padding:0in 0in 0in 0in; height:12.0pt">   </td> <td width="60" valign="top" style= "width:45.0pt;padding:0in 0in 0in 0in; height:12.0pt"> $ 130,427 </td> <td width="12" valign="top" style= "width:9.0pt;padding:0in 0in 0in 0in; height:12.0pt">   </td> <td width="60" valign="top" style= "width:45.0pt;padding:0in 0in 0in 0in; height:12.0pt">   1,544.8 </td> </tr> </table> <style> /*<![CDATA[*/  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; 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<div> <a name="_AUC1e64ca69a6564f559a6f6a855509767a">9.  Segment Information</a>   Covance has two reportable segments: early development and late-stage development. Early development services, which includes Covance’s preclinical and clinical pharmacology service capabilities, involve evaluating a new compound for safety and early effectiveness as well as evaluating the absorption, distribution, metabolism and excretion of the compound in the human body.  It is at this stage that a pharmaceutical company, based on available data, will generally decide whether to continue further development of a drug.  Late-stage development services, which include Covance’s central laboratory, clinical development, periapproval and market access services, are geared toward demonstrating the clinical effectiveness of a compound in treating certain diseases or conditions, obtaining regulatory approval and maximizing the drug’s commercial potential. The accounting policies of the reportable segments are the same as those described in Note 2.   Segment revenues, operating income and total assets for the three and six months ended June 30, 2009 and 2008 are as follows:   <table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style= "margin-left:.2in;border-collapse:collapse;mso-table-layout-alt:fixed; mso-padding-alt:0in 5.4pt 0in 5.4pt"> <tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt"> Early Development </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt"> Late-Stage Development </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt"> Other Reconciling Items </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   Total </td> </tr> <tr style="mso-yfti-irow:1"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">   Three months ended June 30, 2009 </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:2"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total revenues from external customers. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $     199,767 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     266,282 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       23,226  (a) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     489,275 </td> </tr> <tr style="mso-yfti-irow:3"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Operating income........................................ </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $       27,083 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       65,521 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $      (32,607) (b) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       59,997 </td> </tr> <tr style="mso-yfti-irow:4"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total assets................................................. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $  1,184,412 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     547,756 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     134,928  (c) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $  1,867,096 </td> </tr> <tr style="mso-yfti-irow:5"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:6"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt"> Three months ended June 30, 2008 </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:7"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total revenues from external customers. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $     213,119 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     223,793 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       24,911  (a) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     461,823 </td> </tr> <tr style="mso-yfti-irow:8"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Operating income........................................ </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $       54,220 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       43,004 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $      (29,769) (b) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       67,455 </td> </tr> <tr style="mso-yfti-irow:9"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total assets................................................. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $  1,044,026 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     469,261 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       77,252  (c) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $  1,590,539 </td> </tr> <tr style="mso-yfti-irow:10"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:11"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt"> Six months ended June 30, 2009 </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:12"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total revenues from external customers. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $     392,272 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     515,013 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       50,447  (a) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     957,732 </td> </tr> <tr style="mso-yfti-irow:13"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Operating income........................................ </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $       54,243 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     121,849 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $      (60,152) (b) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     115,940 </td> </tr> <tr style="mso-yfti-irow:14"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total assets................................................. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $  1,184,412 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     547,756 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     134,928  (c) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $  1,867,096 </td> </tr> <tr style="mso-yfti-irow:15"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:16"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt"> Six months ended June 30, 2008 </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">   </td> </tr> <tr style="mso-yfti-irow:17"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total revenues from external customers. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $     415,164 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     434,180 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       46,516  (a) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     895,860 </td> </tr> <tr style="mso-yfti-irow:18"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Operating income........................................ </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $     104,794 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       81,874 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $      (56,476) (b) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     130,192 </td> </tr> <tr style="mso-yfti-irow:19;mso-yfti-lastrow:yes"> <td width="240" valign="top" style= "width:2.5in;padding:0in 5.4pt 0in 5.4pt">    Total assets................................................. </td> <td width="114" valign="top" style= "width:85.5pt;padding:0in 5.4pt 0in 5.4pt">       $  1,044,026 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $     469,261 </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $       77,252  (c) </td> <td width="108" valign="top" style= "width:81.0pt;padding:0in 5.4pt 0in 5.4pt">       $  1,590,539 </td> </tr> </table> _________________   <![if !supportLists]>(a)      <![endif]>Represents revenues associated with reimbursable out-of-pocket expenses. <![if !supportLists]>(b)      <![endif]>Represents corporate expenses (primarily information technology, marketing, communications, human resources, finance, legal and stock-based compensation expense). <![if !supportLists]>(c)      <![endif]>Represents corporate assets. <style> /*<![CDATA[*/  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div>

<div> <a name= "_AUC4ecafdbb310a44a8be79634406a7fcbd"> 6.  Short-Term Debt</a>   On June 16, 2009, Covance entered into a new $150.0 million revolving credit facility (the “Credit Facility”) which replaced its credit facility which was due to expire on June 30, 2009. The Credit Facility may be expanded to $200.0 million at Covance’s election.  At June 30, 2009, there were $58.0 million of outstanding borrowings and $1.4 million of outstanding letters of credit under the Credit Facility. At December 31, 2008, there were $50.0 million of outstanding borrowings and $1.4 million of outstanding letters of credit under the previous credit facility. Interest on all outstanding borrowings under the Credit Facility is based upon the London Interbank Offered Rate (“LIBOR”) plus a 200 basis point margin. Interest on all outstanding borrowings under the previous credit facility was based upon LIBOR plus a 75 basis point margin. Interest on outstanding borrowings approximated 1.33% and 3.42% per annum during the six months ended June 30, 2009 and 2008, respectively. Costs associated with the Credit Facility, which expires in June 2012, consisted primarily of bank and legal fees totaling $0.9 million which will be amortized over the three year facility term. The carrying value of amounts drawn under the Credit Facility approximate fair value based on their short-term nature and the indexed interest rate. The Credit Facility contains various financial and other covenants and is collateralized by guarantees of certain of Covance’s domestic subsidiaries and a pledge of 65 percent of the capital stock of certain of Covance’s foreign subsidiaries. At June 30, 2009, Covance was in compliance with the terms of the Credit Facility. <style> /*<![CDATA[*/  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div>

<div> <div class="Section1"> <a name="_AUC31d5f44d972a4d7cb721adb12819c88e">2.  Summary of Significant Accounting Policies</a>   Principles of Consolidation   These unaudited consolidated financial statements include the accounts of all entities controlled by Covance. All significant intercompany accounts and transactions are eliminated.  The equity method of accounting is used for investments in affiliates in which Covance owns between 20 and 50 percent and does not have the ability to exercise control.  For investments in which Covance owns less than 20 percent and does not have the ability to exercise significant influence over operating or financial decisions of the investee, the cost method of accounting is applied.  Where the fair value of the shares of the cost method investee are readily available, Covance accounts for such investments as available-for-sale securities under Statement of Financial Accounting Standards (“SFAS”) No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS 115”).  See Note 4.   Use of Estimates   These unaudited consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.   Inventory   Inventories, which consist principally of finished goods and supplies, are valued at the lower of cost (first-in, first-out method) or market.   Prepaid Expenses and Other Current Assets   In connection with the management of multi-site clinical trials, Covance pays on behalf of its customers fees to investigators, volunteers and other out-of-pocket costs (such as travel, printing, meetings, couriers, etc.), for which we are reimbursed at cost, without mark-up or profit. Amounts receivable from customers in connection with billed and unbilled investigator fees, volunteer payments and other out-of-pocket pass-through costs are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets and totaled $53.9 million and $52.7 million at June 30, 2009 and December 31, 2008, respectively.  See Note 2 “Reimbursable Out-of-Pocket Expenses”. </div><span style= "font-size:10.0pt;font-family:Times New Roman;mso-fareast-font-family: Times New Roman;background:white;mso-highlight:white;mso-ansi-language:EN-US; mso-fareast-language:EN-US;mso-bidi-language:AR-SA"> Goodwill and Other Intangible Assets and Impairment   Goodwill represents costs in excess of the fair value of net tangible and identifiable net intangible assets acquired in business combinations. In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, Covance performs an annual test for impairment of goodwill and other indefinite lived intangible assets during the fourth quarter. This test is performed by comparing, at the reporting unit level, the carrying value of the reporting unit to its fair value. Covance assesses fair value based upon its estimate of the present value of the future cash flows that it expects to be generated by the reporting unit. The most recent annual test for impairment performed for 2008 did not identify any instances of impairment and there were no events through June 30, 2009 that warranted a reconsideration of our impairment test results.   Revenue Recognition   Covance recognizes revenue either as services are performed or products are delivered, depending on the nature of the work contracted. Historically, a majority of Covance's net revenues have been earned under contracts which range in duration from a few months to two years, but can extend in duration up to five years or longer. We also have dedicated capacity arrangements with certain clients ranging in duration from one to ten years. Underlying these arrangements are individual project contracts for the specific services to be provided. Dedicated capacity arrangements enable our clients to secure space in our facilities in exchange for which they agree to provide a guaranteed annual minimum dollar value (“volume”) of work. Under these types of arrangements, if the annual minimum volume commitment is not reached, the client is required to pay Covance for the shortfall. Progress towards the achievement of annual minimum volume guarantees is monitored throughout the year. Annual minimum guarantee shortfalls are included in net revenues when the amount of the shortfall is determinable and realization is assured.   Service contracts generally take the form of fee-for-service or fixedprice arrangements. In cases where performance spans multiple accounting periods, revenue is recognized as services are performed, measured on a proportional-performance basis, generally using output measures that are specific to the service provided. Examples of output measures in our early development segment include the number of slides read, dosings performed, or specimens prepared for preclinical laboratory services, or number of dosings or number of volunteers enrolled for clinical pharmacology. Examples of output measures in our late-stage development segment’s clinical development service offering include among others, number of investigators enrolled, number of sites initiated, number of patients enrolled and number of monitoring visits completed. Revenue is determined by dividing the actual units of work completed by the total units of work required under the contract and multiplying that percentage by the total contract value. The total contract value, or total contractual payments, represents the aggregate contracted price for each of the agreed upon services to be provided. We do not have any contractual arrangements spanning multiple accounting periods where revenue is recognized on a proportional-performance basis under which we have earned more than an immaterial amount of performance-based revenue (i.e. potential additional revenue tied to specific deliverables or performance). Changes in the scope of work are common, especially under long-term contracts, and generally result in a change in contract value. Once the client has agreed to the changes in scope and renegotiated pricing terms, the contract value is amended and revenue is recognized as described above. Estimates of costs to complete are made to provide, where appropriate, for losses expected on contracts. Costs are not deferred in anticipation of contracts being awarded, but instead are expensed as incurred.   Billing schedules and payment terms are generally negotiated on a contract-by-contract basis. In some cases, we bill the client for the total contract value in progress-based installments as we reach certain non-contingent billing milestones over the contract duration, such as, but not limited to, contract signing, initial dosing, investigator site initiation, patient enrollment or database lock. The term “billing milestone” relates only to a billing trigger in a contract whereby amounts become billable and payable in accordance with a negotiated predetermined billing schedule throughout the term of a project. These billing milestones are not performance-based (i.e., potential additional arrangement consideration tied to specific deliverables or performance). In other cases, billing and payment terms are tied to the passage of time (e.g., monthly billings). In either case, the total contract value and aggregate amounts billed to the client would be the same at the end of the project. While we attempt to negotiate terms that provide for billing and payment of services prior to or within close proximity to the provision of services, this is not always the case, as evidenced by fluctuations in the levels of unbilled receivables and unearned revenue from period to period. While a project is ongoing, cash payments are not necessarily representative of aggregate revenue earned at any particular point in time, as revenues are recognized when services are provided, while amounts billed and paid are in accordance with the negotiated billing and payment terms.   In some cases, payments received are in excess of revenue recognized.  For example, a contract invoicing schedule may provide for an upfront payment of 10% of the full contract value upon contract signing, but at the time of signing, performance of services has not yet begun, and therefore, no revenue has yet been recognized. Payments received in advance of services being provided, such as in this example, are deferred as unearned revenue on the balance sheet. As the contracted services are subsequently performed and the associated revenue is recognized, the unearned revenue balance is reduced by the amount of revenue recognized during the period.   In other cases, services may be provided and revenue is recognized before we have invoiced the client. In these cases, revenue recognized will exceed amounts billed, and the difference, representing an unbilled receivable, is recorded for this amount that is currently unbillable to the customer pursuant to contractual terms. Once we have invoiced the client, the unbilled receivable is reduced for the amount billed, and a corresponding account receivable is recorded. All unbilled receivables are billable to customers within one year from the respective balance sheet date.   Most contracts are terminable by the client either immediately or upon notice. These contracts typically require payment to Covance of expenses to wind down the study, fees earned to date and, in some cases, a termination fee or a payment to Covance of some portion of the fees or profits that could have been earned by Covance under the contract if it had not been terminated early. Termination fees are included in net revenues when realization is assured. In connection with the management of multi-site clinical trials, Covance pays on behalf of its customers fees to investigators, volunteers and other out-of-pocket costs (such as for travel, printing, meetings, couriers, etc.), for which it is reimbursed at cost, without mark-up or profit. Investigator fees are not reflected in total revenues or expenses where Covance acts in the capacity of an agent on behalf of the pharmaceutical company sponsor, passing through these costs without risk or reward to Covance. All other out-of-pocket costs are included in total revenues and expenses.   Taxes   Covance uses the asset and liability method of accounting for income taxes.  Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amount of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.  The effect on deferred taxes of a change in enacted tax rates is recognized in income in the period when the change is effective.   The Company accounts for uncertain income tax positions in accordance with the provisions of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 (“FIN 48”).  Under the guidance of FIN 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. The amount of the accrual for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position.  Components of the reserve are classified as either a current or long-term liability in the consolidated balance sheet based on when the Company expects each of the items to be settled.  Covance records interest and penalties accrued in relation to unrecognized tax benefits as a component of income tax expense.   As of June 30, 2009, the balance of the reserve for unrecognized tax benefits was $12.3 million, including accrued interest of $1.6 million, of which $3.4 million is recorded as a current liability in accrued expenses and other current liabilities, and $8.9 million is recorded as a long-term liability in other liabilities on the consolidated balance sheet. As of December 31, 2008, the balance of the reserve for unrecognized tax benefits was $11.9 million, including accrued interest of $1.2 million, of which $3.3 million was recorded as a current liability in accrued expenses and other current liabilities, and $8.6 million was recorded as a long-term liability in other liabilities on the consolidated balance sheet.  This reserve relates to exposures for income tax matters such as transfer pricing, nexus, deemed income and research and development credits. The net increase in the reserve for unrecognized tax benefits from December 31, 2008 to June 30, 2009 resulted from the accrual of interest on existing reserves.   The Company also maintains a tax reserve related to exposures for non-income tax matters including value-added tax and state sales and use and other taxes, which are accounted for in accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies. The balance of this reserve at both June 30, 2009 and December 31, 2008 is $0.9 million and is recorded as a current liability in accrued expenses and other current liabilities on the consolidated balance sheet.   While Covance believes it has identified all reasonably identifiable exposures and the reserve it has established for identifiable exposures is appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts different than the amounts reserved. It is also possible that changes in facts and circumstances could cause Covance to either materially increase or reduce the carrying amount of its tax reserve.   Covance's historical policy has been to leave its unremitted foreign earnings invested indefinitely outside the United States. Covance intends to continue to leave its unremitted foreign earnings invested indefinitely outside the United States. As a result, taxes have not been provided on any of the remaining accumulated foreign unremitted earnings as of June 30, 2009.   Comprehensive Income   Covance’s total comprehensive income represents net income plus the change in the cumulative translation adjustment equity account for the periods presented. For the three and six months ended June 30, 2009, comprehensive income also includes the increase (decrease) in the unrealized gain on available-for-sale securities of $0.1 million and ($0.1 million), net of tax, respectively, resulting from the change in the classification of Covance’s minority equity investment in Bio-Imaging Technologies, Inc. (“BIOC”) to an available-for-sale security in accordance with SFAS 115 in the fourth quarter of 2008. Total comprehensive income was $72.7 million and $42.2 million for the three months ended June 30, 2009 and 2008, respectively, and $98.8 million and $116.0 million for the six months ended June 30, 2009 and 2008, respectively.   Reimbursable Out-of-Pocket Expenses   As discussed in Note 2 “Prepaid Expenses and Other Current Assets”, Covance pays on behalf of its customers fees to investigators, volunteers and other out-of-pocket costs for which the Company is reimbursed at cost, without mark-up or profit.  In connection with the requirements of Financial Accounting Standards Board Emerging Issues Task Force Rule No. 01-14 (“EITF 01-14”), Income Statement Characterization of Reimbursements Received for “Out-of-Pocket” Expenses Incurred, amounts paid to volunteers and other out-of-pocket costs are reflected in operating expenses, while the reimbursements received are reflected in revenues in the consolidated statements of income.  Covance will continue to exclude from revenue and expense in the consolidated statements of income fees paid to investigators and the associated reimbursement since Covance acts as an agent on behalf of the pharmaceutical company sponsors with regard to investigator payments, in accordance with the Financial Accounting Standards Board Emerging Issues Task Force Rule No. 99-19 (“EITF 99-19”), Reporting Revenue Gross as a Principal Versus Net as an Agent.   Stock-Based Compensation   The Company sponsors several stock-based compensation plans pursuant to which non-qualified stock options and restricted stock awards are granted to eligible employees.  These plans are described more fully in Note 8 herein and Note 10 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008. The Company recognizes stock-based compensation under the provisions of Statement of Financial Accounting Standards No. 123R, Share-Based Payments, (“SFAS 123R”) pursuant to which the grant-date fair value of awards expected to vest is expensed on a straight-line basis over the vesting period of the related awards.   Defined Benefit Pension Plans   The Company sponsors various pension and other post-retirement benefit plans. These plans are described more fully in Note 7 herein and Note 9 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008. The measurement of the related benefit obligations and the net periodic benefit costs recorded each year are based upon actuarial computations, which require management’s judgment as to certain assumptions. These assumptions include the discount rates to use in computing the present value of the benefit obligations and the net periodic benefit costs, the expected future rate of salary increases (for pay-related plans) and the expected long-term rate of return on plan assets (for funded plans). The discount rates are derived based on a hypothetical yield curve represented by a series of annualized individual discount rates. The expected long-term rate of return on plan assets is based on the target asset allocation and the average expected rate of growth for the asset classes invested. The average expected rate of growth is derived from a combination of historic returns, current market indicators, the expected risk premium for each asset class and the opinion of professional advisors.   Effective December 31, 2008, Covance adopted the measurement date provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements Nos. 87, 88, 106 and 132(R) (“SFAS 158”). The measurement date provision of SFAS 158 eliminated the early measurement date option and requires a plan’s funded status to be measured as of the employer’s fiscal year end. As such, liabilities related to all of Covance’s pension and other post-retirement benefit plans are now measured as of December 31.   Earnings Per Share (“EPS”)   Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding during the period.  The computation of diluted EPS is similar to the computation of basic EPS, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued; computed under the treasury stock method in accordance with the requirements of Statement of Financial Accounting Standards No. 128, Earnings Per Share.    In computing diluted EPS for the three months ended June 30, 2009 and 2008, the denominator was increased by 369,872 shares and 931,345 shares, respectively, and for the six months ended June 30, 2009 and 2008, the denominator was increased by 319,038 shares and 989,631 shares, respectively, representing the dilutive effect of stock options outstanding at June 30, 2009 and 2008 with exercise prices less than the average market price of Covance’s common stock during each respective period.  Excluded from the computation of diluted EPS for the three months ended June 30, 2009 were options to purchase 1,162,798 shares of common stock at prices ranging from $42.25 to $94.34 per share because the exercise prices of such options were greater than the average market price of Covance’s common stock during this period.  Excluded from the computation of diluted EPS for the six months ended June 30, 2009 were options to purchase 1,168,143 shares of common stock at prices ranging from $40.18 to $94.34 per share because the exercise prices of such options were greater than the average market price of Covance’s common stock during this period.  Excluded from the computation of diluted EPS for the three months ended June 30, 2008 were options to purchase 17,177 shares of common stock at prices ranging from $83.23 to $87.33 per share because the exercise prices of such options were greater than the average market price of Covance’s common stock during this period.  Excluded from the computation of diluted EPS for the six months ended June 30, 2008 were options to purchase 15,400 shares of common stock at prices ranging from $86.02 to $87.33 per share because the exercise prices of such options were greater than the average market price of Covance’s common stock during this period.   Supplemental Cash Flow Information   Cash paid for interest for each of the six month periods ended June 30, 2009 and 2008 was $0.6 million. Cash paid for income taxes for the six month periods ended June 30, 2009 and 2008 totaled $20.0 million and $37.6 million, respectively. The change in income taxes payable in the consolidated statement of cash flows for the six months ended June 30, 2009 and 2008 includes as an operating cash outflow the excess tax benefit received from the exercise of non-qualified stock options as measured under SFAS 123R of $0.04 million and $2.9 million, respectively (a corresponding cash inflow of $0.04 million and $2.9 million, respectively, has been included in financing cash flows).   Recently Issued Accounting Standards   In December 2008, the Financial Accounting Standards Board (the “FASB”) issued FASB Staff Position 132(R)-1 (“FSP 132(R)-1”), which provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. FSP 132(R)-1 requires disclosure of investment allocation methodologies and information that enables users of financial statements to assess the inputs and valuation techniques used to develop fair value measurements of plan assets in order to provide users with an understanding of significant concentrations of risk in plan assets. FSP 132(R)-1 is effective for years ending after December 15, 2009. FSP 132(R)-1 requires additional disclosure only and therefore will not impact Covance’s consolidated results of operations or financial position.   In April 2009, the FASB issued FASB Staff Position 107-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP 107-1”) to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP 107-1 amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments and APB Opinion No. 28, Interim Financial Reporting (“APB 28”). FSP 107-1 is effective for interim reporting periods ending after June 15, 2009 and was adopted by Covance during the quarter ended June 30, 2009. FSP 107-1 requires additional disclosure only and therefore did not impact Covance’s results of operations or financial position.  See Notes 4 and 6 for information related to the fair value of Covance’s financial instruments.   In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, Subsequent Events ("SFAS 165"). SFAS 165 establishes general standards of disclosure about events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009 and was adopted by Covance during the quarter ended June 30, 2009. SFAS 165 requires additional disclosure only and therefore did not impact Covance’s results of operations or financial position.  See Note 10.   Subsequent Events   In accordance with the adoption of SFAS 165, subsequent events are defined as those events or transactions that occur after the balance sheet date, but before the financial statements are filed with the Securities and Exchange Commission. See Note 10. <style> /*<![CDATA[*/ st1:*{behavior:url(#ieooui) }  /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} /*]]>*/ </style> </div>

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